Investment committee memorandum
Harbor View Medical Office
San Diego, California · Medical office · 72,000 SF
Recommendation
Pursue with Caution- Purchase price
- $31.20M
- Going-in cap
- 7.00%
- Year 1 DSCR
- 1.76x
- Levered IRR
- 15.0%
I. Executive summary
A fully leased medical office building in San Diego with an 8.5-year weighted average lease term. Underwritten at a 7.00% going-in cap with 60% leverage at 5.25%, the deal returns a 15.0% levered IRR over a 5-year hold.
Highlights
- 100% occupied, 8.5 yrs WALT
- Year 1 DSCR of 1.76x against a 1.20x minimum
- Exit cap of 7.25% is above the going-in cap
Key risks
- Year 1 LP pref coverage is 0.82x, below the 1.25x line
- Returns assume 5.25% financing at 60% LTV
